Bond Market Update

Inching Higher

• U.S. Treasuries are on track for a modestly higher start after a couple days of losses in longer tenors. Treasury futures rallied in early evening action, hitting highs shortly before the start of the Asian session. The market gave back some of its gains during the night but made another run at highs once the focus shifted to Europe, though recent action has seen a slip toward overnight lows. The market's focus remained on Japan, where the Nikkei saw some volatility before ending with a loss of 0.7% while the yen recovered some of its losses from the past two days. The Bank of Japan released the Summary of Opinions from its July policy meeting, showing that policymakers believe that the neutral rate is about 1.00%. The market did not receive any top-tier data overnight while the U.S. session will feature weekly Initial Claims (Briefing.com consensus 242,000; prior 249,000) and Continuing Claims (prior 1.877 mln) at 8:30 ET, followed by a $25 bln 30-yr bond auction at 13:00 ET. Crude oil holds a modest gain while the U.S. Dollar Index is down 0.1% at 103.10.
• Yield Check:
  • 2-yr: -3 bps to 3.97%
  • 3-yr: -4 bps to 3.80%
  • 5-yr: -4 bps to 3.76%
  • 10-yr: -4 bps to 3.93%
  • 30-yr: -2 bps to 4.24%

• News:
  • The Reserve Bank of India made no policy changes at today's meeting.
  • Toyota (TM) lowered its 2024 production forecast below 10 mln units for the first time since the pandemic.
  • British recruitment firm PageGroup noted that activity softened near the end of the first half of the year.
  • Conglomerate Siemens lowered the outlook for its industrial unit.
  • Japan's July Bank Lending was up 3.2% yr/yr, as expected (last 3.2%). June Current Account surplus reached JPY1.78 trln (expected surplus of JPY2.34 trln; last surplus of JPY2.41 trln). July Economy Watchers Current Index rose to 47.5 from 47.0 (expected 47.4).
  • New Zealand's Q3 Inflation Expectations decelerated to 2.0% from 2.3%.
• Commodities:
  • WTI Crude: +0.2% to $75.40/bbl
  • Gold: +0.7% to $2449.30/ozt 
  • Copper: +0.2% to $3.961/lb
• Currencies:
  • EUR/USD: +0.1% to 1.0929
  • GBP/USD: UNCH at 1.2695
  • USD/CNH: UNCH at 7.1698
  • USD/JPY: -0.4% to 146.18
• Data out Today:
  • 8:30 ET: Weekly Initial Claims (Briefing.com consensus 242,000; prior 249,000) and Continuing Claims (prior 1.877 mln)
  • 10:00 ET: June Wholesale Inventories (Briefing.com consensus 0.2%; prior 0.6%)
  • 10:30 ET: Weekly natural gas inventories (prior +18 bcf)
• Treasury Auctions:
  • 13:00 ET: $25 bln 30-yr Treasury bond auction results